Where's that used-vehicle price plunge?

It's been a familiar refrain: In 2016, used-vehicle prices would drop because of the increased supply of off-lease vehicles.

But that hasn't happened.

In fact, the Manheim Used Vehicle Value Index in July rose for the fourth straight month to its highest level -- 127.0 -- since 127.5 in June 2011. In July 2015, it stood at 124.1. Black Book concluded that in July, used-vehicle prices were settling into "seasonal depreciation patterns." That's hardly setting off alarms.

So what's going on?

For starters, strong demand for used trucks caused their prices to surge, which offset lower used-car prices, especially in the subcompact and midsize segments, and buoyed overall values.

Favorable economic conditions and an industry that better understands how to buy, price and sell used vehicles also benefited used-vehicle prices this year, forecasters say. And the increased supply largely came in the form of 1- to 3-year-old off-lease vehicles in good condition, which have buoyed the average prices seen at auctions.

Their predictions may not have come true yet, but forecasters say their crystal balls still will be proved correct. They say used-vehicle depreciation will worsen in the second half of the year, driven by upticks in the supply of used vehicles and in new-car incentives.

KAR Auction Services Inc., parent company of auction giant ADESA, went into 2016 predicting that used-vehicle prices would drop 3 to 5 percent this year.

While prices have held firm so far, "we're now starting to see them soften a little bit more, and we may get to those 3 to 5 percent levels," CEO Jim Hallett said. 

Manheim Chief Economist Tom Webb says current used-vehicle values are not abnormal relative to several long-term historic relationships. 

"Most notably, with respect to new-vehicle pricing [when looked at using both the new-vehicle Consumer Price Index and average transaction prices], wholesale pricing is not exceptionally high," he wrote in his commentary this month. Manheim's index started in 1995 and is adjusted for vehicle mix, mileage and time of year. 

Jonathan Banks, executive analyst at NADA Used Car Guide, expects used-vehicle prices to soften at least somewhat more this year, but he admits he is surprised at the "resilience" of the used-car market. Better marketing strategies, such as in the certified pre-owned segment, has helped, he said. 

"CPO is one aspect, and understanding market prices, which seems intuitive," is another, Banks said. "But sometimes dealers buy cars at wholesale and think they can do cost-plus pricing. Now they look at what will the market bear, and they price accordingly. They're looking at a better turn, market prices and utilizing all the data they generate internally and third-party data like we create." 

Banks said 3.1 million off-lease vehicles are expected to return to the market this year, up from 2.3 million in 2015. That number is expected to grow to 3.4 million in 2017 and 3.8 million in 2018. 

Those are the figures that led to the original forecasts of sliding used-vehicle prices. Add rising supply to steady demand, the logic went, and prices had to soften.

And to some extent, it has happened. 

Through July, NADA Used Car Guide data show that prices of used vehicles up to 8 years old depreciated 12.5 percent vs. just 9.6 percent for similar vehicles in the same period last year. 

Prices of used subcompact cars have taken the biggest hit this year, with prices dropping 20 percent through July vs. a drop of just over 13 percent in the year-earlier period, according to the NADA guide. Yet the segment's 3.9 percent price decline in July from June matched the average for that period in the previous three years, the company said. 

Conversely, through July, full-size pickups were down almost 7 percent, vs. about 3 percent last year. 

Anil Goyal, senior vice president of automotive valuation and analytics at Black Book, agrees that "depreciation for all segments will likely worsen" in the fall as demand for segments such as subcompact continues to dwindle. 

He cites the strong economy, including credit availability and low interest rates, as among the reasons used-vehicle prices have held up so well this year. Plus, Goyal says, "The job market continues to look good, and gas prices are low, making the bigger pickup trucks and SUVs sustain better valuation."